Small Business Relief for UAE Corporate Tax
Some businesses are exempt from ordinary corporate tax reporting requirements and are released from the need to calculate and pay corporate tax under the Small Business Relief program.
In the relevant Tax Period ending on or before December 31, 2026, and in previous Tax Periods, an eligible Taxable Person with Revenue of AED 3 million or less may choose to be treated as having no Taxable Income in that Tax Period. In such case, the Taxable Person will not be required to calculate its Taxable Income or file a complete Corporate Tax Return.
Who can claim Small Business Relief for UAE Corporate Tax purposes?
- Any of the following UAE Resident Persons with Revenue of AED 3 million or less in the current and prior Tax Periods may claim Small Business Relief for Tax Periods ending on or before December 31, 2026:
- An ordinary individual.
- A legal body that is not a qualifying free zone person or a constituent company of a multinational enterprise group, as that term is defined in Cabinet Decision No. 44 of 2020, which operates in more than one country and generates more than AED 3.15 billion in total consolidated group revenue annually.
A Taxable Person will no longer be eligible for Small Business Relief for that Tax Period and any subsequent Tax Periods if their Revenue exceeds AED 3 million.
If a business has earned Taxable Income of AED 1 million, what will be the UAE Corporate Tax amount payable?
If the business’s annual revenue is AED 3 million or less, it can choose to apply for Small Business Relief for tax periods ending on or before December 31, 2026, as long as it also satisfies the other applicable requirements. After then, the company will be regarded as though it had no taxable income, and no corporate tax will need to be paid.
The corporate tax due will be determined as follows if a Taxable Person with AED 1 million in taxable income is not eligible for small business relief or does not elect to receive it:
- AED 375,000 in Taxable Income is subject to 0% Corporate Tax: AED 375,000 x 0% = AED 0.
- AED 375,000 or more in taxable income is subject to 9% corporate tax: (1,000,000 AED – 375,000 AED) = 625,000 AED x 9% = 56,250 AED
For the Tax Period, the UAE Corporate Tax due will be equal to AED 0 plus AED 56,250, or AED 56,250.
Revenue is the total money received during a tax period from the sale of goods and assets, services, royalties, interest, premiums, dividends, and any other sums, before any kind of deduction for expenses of any kind is made. Gross income is defined as gross revenues from sales of goods or services, less any deductions for the cost of services or the cost of commodities sold.
IBR Group's Corporate Tax Services in UAE
At IBR GROUP, we acknowledge the uniqueness of each business, their individual goals, and specific strategies. Therefore, our corporate tax solutions are tailor-made to suit your exact requirements. Our corporate tax consultants in UAE extend their expertise in areas such as Corporate Tax Registration and Corporate Tax Returns filing, Corporate Tax Assessment. They are well-equipped to elucidate the latest regulations issued by the Federal Tax Authority, preventing businesses from incurring Corporate Tax fines and penalties.
Disclaimer: Above all information is for general reference only and sourced from internet, before making any kind of decision please visit the authorized websites of authorities and service providers.